Correlation Between Lamb Weston and CHS
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and CHS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lamb Weston and CHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamb Weston Holdings and CHS Inc CL, you can compare the effects of market volatilities on Lamb Weston and CHS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lamb Weston with a short position of CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and CHS.
Diversification Opportunities for Lamb Weston and CHS
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lamb and CHS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and CHS Inc CL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CL and Lamb Weston is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lamb Weston Holdings are associated (or correlated) with CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CL has no effect on the direction of Lamb Weston i.e., Lamb Weston and CHS go up and down completely randomly.
Pair Corralation between Lamb Weston and CHS
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to generate 3.77 times more return on investment than CHS. However, Lamb Weston is 3.77 times more volatile than CHS Inc CL. It trades about 0.01 of its potential returns per unit of risk. CHS Inc CL is currently generating about -0.2 per unit of risk. If you would invest 7,709 in Lamb Weston Holdings on September 2, 2024 and sell it today you would earn a total of 15.00 from holding Lamb Weston Holdings or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. CHS Inc CL
Performance |
| Timeline |
| Lamb Weston Holdings |
| CHS Inc CL |
Lamb Weston and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and CHS
The main advantage of trading using opposite Lamb Weston and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, CHS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CHS will offset losses from the drop in CHS's long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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